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Q. It is impossible for economic growth in a small country to lower that country's economic welfare, regardless of the bias of the growth. Explain.
Answer: This is a true statement that the reason economic growth may possibly hurt a country is if the terms of trade effect counters and dominates the growth effect. In the case of the miniature country there are no terms of trade effect.
Q. In recent cases, the U.S. placed quotas or protectionist tariffs on imported microchips and imported steel. In both cases the damage to "downstream" industries was obvious to
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How is the foreign exchange rate determined?
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Q. Factor-intensity reversals define a situation in which the production of a product can be land-intensive in one country, and relatively labor intensive in another ( at given re
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Explain how the money markets of two countries are linked through the foreign exchange market. Answer: The financial policy actions by the Fed affect the U.S. interest rate al
Q. Explain why the dollar of the United States became the postwar world's key currency. Answer: 1. The untimely convertibility of the U.S dollar in 1945. 2.
Explain the law of demand. Briefly discussed the exception to the law of demand
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